Sunday, September 20

MAHB could leverage on GHIAL stake to attract more airlines


File photo shows the Rajiv Ganghi International Airport, one of the airports under GHIAL’s portfolio.

KUCHING: After terminating its plan to sell its stake in GMR Hyderabad International Airport Ltd (GHIAL), Malaysia Airports Holdings Bhd (MAHB) could instead leverage on its stake in GHIAL to attract more Indian-based airlines moving forward.

In reference to earlier announcements by MAHB on the proposed disposal of its entire 11 per cent equity interest in GHIAL, the group’s Board of Directors recently announced in a filing on Bursa Malaysia that the sale and purchase agreement (SPA) has been automatically terminated.

In the filing, MAHB explained this was due to failure of the purchaser to complete their obligation in accordance with the terms of the SPA by December 31, 2018.

Following this development, MAHB and MAHB (Mauritius) Private Limited remains as shareholders of GHIAL accordingly.

“While the termination puts a hold to the unlocking of MAHB’s investment in India, we opine that MAHB could still leverage on its stake in GHIAL to attract more Indian-based airlines moving forward as part of its global transit network,” the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) said.

“Recall that in November 2018, the commencement of flights of Indian low-cost airline, IndiGo Airlines to klia2 partially contributed to the 3.9 per cent year on year (y-o-y) growth in international passengers, the largest in three months, pushing the load factor to 77.8 per cent, 1.7 percentage points (ppts) higher than a year ago.

“Therefore, we do not discount the possibility of more flight arrangements with IndiGo airlines as it commands a market share of 43 per cent in India as of November 2018, making it India’s largest passenger airline.”

Looking ahead, MIDF Research believed that MAHB is riding on a positive trajectory based on the group’s latest passenger data.

“Moreover, we expect MAHB’s efforts in not only attracting more new airlines but also offering

increased connectivity to weigh on the effects of the departure levy set to be imposed in June 2019 for outgoing international passengers.

“For instance, TUI Airways has commenced their first flight from Birmingham to Langkawi in December 2018.”

The research arm also believed that the overall tourism initiatives outlined in Budget 2019 could uphold the demand and support the overall load factor at MAHB airports.